Key Highlights

  • AEPC has urged Piyush Goyal and Giriraj Singh to regulate cotton yarn exports, especially of 20s count and above.
  • Cotton yarn prices have surged nearly 60%, from Rs 250 per kg in early 2026 to nearly Rs 400 per kg now.
  • Exports to Bangladesh and Vietnam have risen sharply following US restrictions on Chinese cotton under UFLPA.
  • Finished garments fetch Rs 800-1,200 per kg — far higher than raw cotton (Rs 275) or yarn (Rs 325).
  • Industry says higher input costs are threatening competitiveness even as India secures new FTAs with the UK and New Zealand.

India's apparel export sector is flashing warning signals, and its apex body has now taken those concerns directly to the highest levels of government. The Apparel Export Promotion Council (AEPC) on Saturday wrote to Union Commerce and Industry Minister Piyush Goyal and Union Textiles Minister Giriraj Singh, urging them to take suitable measures to regulate cotton yarn exports as prices surge to levels that are beginning to erode the country's competitiveness in value-added garment exports.

The Ask: Regulate 20s Count and Above

In his letter, AEPC Chairman Dr A. Sakthivel specifically sought government intervention to regulate the export of cotton yarn of 20s count and above. That specificity matters. It reflects a strategic push to protect the exact yarn category that Indian garment manufacturers rely on the most for finished export product manufacturing.

The Core Argument: Value Addition Over Raw Exports

Sakthivel's letter framed the issue not as a demand for protectionism but as a matter of national economic strategy. India, he argued, needs to prioritise value-added exports — such as finished garments — that generate substantially higher value realisation and employment compared with exports of raw cotton and yarn.

The numbers he laid out are striking. Raw cotton currently fetches around Rs 275 per kg. Cotton converted into yarn fetches approximately Rs 325 per kg. But a kilogram of finished garments can command anywhere between Rs 800 and Rs 1,200 after value addition — often three to four times the return of raw exports.

That's the underlying case for regulation: keep more of India's cotton within India, add value domestically, and capture the higher-margin end of the global textile chain.

Why Prices Have Surged

AEPC attributed the sharp increase in yarn prices to supply-side constraints. Limited stock availability with ginners and reduced cotton arrivals have led mills to increasingly rely on Cotton Corporation of India (CCI) auctions, tightening the supply pipeline further.

Compounding the pressure is a significant geopolitical development. AEPC flagged that exports of Indian cotton and cotton yarn to apparel-producing countries like Bangladesh and Vietnam have risen sharply, largely because of US restrictions on the use of Chinese cotton under the Uyghur Forced Labor Prevention Act (UFLPA). With buyers globally moving away from Chinese cotton, Indian cotton has become an increasingly attractive alternative — pushing prices upward at home even as exports rise.

The Downstream Impact on Garment Manufacturers

For apparel exporters, who largely procure fabric from the domestic market, higher cotton and yarn prices are translating directly into rising fabric and garment manufacturing costs. That cost pressure is now beginning to affect their competitiveness in global markets — precisely when India is trying to scale up in international apparel trade.

The pain point is compounded by the fact that Indian apparel exporters have historically competed on price and quality against countries like Bangladesh, Vietnam, and Turkey — countries that, in some cases, are the very buyers of India's cotton yarn.

The FTA Opportunity at Risk

The AEPC letter emphasised that the timing of this cost pressure could not be worse. India is gaining greater access to international markets through fresh free trade agreements (FTAs), including with the UK and New Zealand. These are exactly the markets where higher-margin finished garments can command premium value — but only if Indian manufacturers can produce at competitive cost.

If yarn prices remain elevated, India risks losing the very edge that these FTAs are supposed to unlock.

The 60% Price Surge

The scale of the price increase is enough to trigger action on its own. Cotton yarn prices have risen by around 60 per cent — from about Rs 250 per kg in early 2026 to nearly Rs 400 per kg currently. That kind of surge, in less than a year, adds significant cost pressure across the apparel manufacturing value chain and can meaningfully impact bottom-line margins for exporters.

Why It Matters

India's apparel sector is one of its most employment-intensive export industries. Every rupee of value that stays within India — from raw cotton through yarn through fabric through finished garment — creates jobs, generates GST revenue and strengthens the country's trade balance. When too much of that value walks out of the country at the cotton or yarn stage, India ends up selling the raw material to competitors who then out-manufacture Indian firms at the finished garment level.

AEPC's plea is essentially about correcting that imbalance while there is still time.

The Policy Choice Ahead

The government now faces a familiar but consequential policy trade-off. On one side is the immediate revenue and diplomatic benefit of allowing Indian cotton and yarn to flow freely to global buyers. On the other is the longer-term strategic priority of ensuring that India's textile ecosystem retains competitiveness at the garment-manufacturing level — which is where the real employment, GDP contribution and export value lie.

The AEPC letter is essentially asking the government to lean toward the second option — even if that means temporarily regulating the flow of higher-count cotton yarn exports.

Industry Impact

If the government does move to regulate yarn exports, the near-term impact will be visible fastest at spinning mills — some of whom may face reduced export volumes. But the medium-term effect on garment exporters could be significant: cheaper input costs, higher order competitiveness, and stronger utilisation of new FTA opportunities.

For the broader Indian textile ecosystem, the request also underlines a maturing industry-government dialogue — one where sectoral players are actively shaping the policy conversation rather than merely responding to it.

The Bigger Picture

India's ambition to grow its apparel exports isn't just about winning market share — it is about capturing higher-value manufacturing at scale. But that ambition cannot survive a sustained input-cost spike of the kind currently underway in cotton yarn. AEPC's letter to Piyush Goyal is therefore more than a routine industry request. It is a signal from India's export community that the country stands at an important juncture — one where a targeted policy intervention could preserve one of India's most strategic manufacturing advantages, or the absence of one could let that advantage slowly leak out through raw yarn exports. What Delhi decides in the coming weeks will shape not just the next quarter's export numbers, but the trajectory of India's apparel manufacturing story for years to come.